Lawmakers add crucial funds to unemployment trust fund on final day of 2021 session

Closeup of the top of a tax Form 1099G Certain Government Payments - Taxable Unemployment Compensation Payments on top of cash with some coins scattered on top.

UPDATED WITH FINAL VOTES: On the final day of the 2021 session, lawmakers passed an amended bill with language that would put funds toward the drained Unemployment Insurance Trust Fund to help pay down the federal loan, add money for full day kindergarten, and more.

After months of unprecedented unemployment insurance benefits claims amid the COVID-19 global pandemic, the state had to borrow money from the federal government to pay the record number of claims—which translates to a large financial hit for employers.

The federal loan, totaling more than $800 million, ensures claims are paid but outside of additional money being put back into the fund, the only way to repay this money is an increase in rates for all Kentucky employers, even those who did not lay off employees.

An amendment to House Bill 382, made in the Senate Appropriations and Revenue Committee Tuesday morning, appropriates $575 million from the recent federal stimulus package passed to the ailing Trust Fund.

The Kentucky Chamber has been sounding the alarm on this issue since the start of the pandemic and asking the legislature and the governor to use federal funds coming into the state toward this fund as a solution to the unprecedented issue.

On Tuesday morning, Kentucky Chamber President and CEO Ashli Watts applauded this addition to the legislation and urged passage of the newly-amended bill.

“This is a critical step in helping Kentucky’s businesses, citizens, and economy recover from this pandemic. As businesses work to get Kentuckians back to work, it is crucial they are not hit with large tax increases due to the drained Unemployment Insurance Trust Fund.  We have advocated the use of federal dollars for this purpose and encourage passage of House Bill 382 today,” Watts said.

The committee substitute also adds an additional $50 million for broadband from the federal stimulus, allocates $140 million to fund full day kindergarten, extends the Executive Orders for flood and ice events following recent hardships across the state, puts $50,000 toward the African American Heritage Commission, and clarifies broadband language from House Bill 320.

The original version of House Bill 382 includes clean up language from the Department of Local Government on the regional development agency assistance fund.

The amended version of House Bill 382 passed through the committee unanimously and passed the full Senate with a 36-1 vote. The House passed the legislation 90-3. It now goes to the governor for his consideration.

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Jacqueline Pitts
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